710: European and UK Economies The Collapse Has Begun - Extreme Uncompetitiveness With The USA and China
01-30-2025
PropertyInvesting.net team
Innovation and technology are driving huge new prosperity around the world. The only problem for the UK and Europe is its not there.
Most of Europe is governed by politicians with no business, technical or scientific background or expertise. They are devoid knowledge on how business and economics work. This is very dangerous. Many of the Brussels ruling liberal elite are unelected bureaucrats removed from the every day life of hard working people within the private sector. They are on the whole globalists that seem to want to protect the interests of the world in the longer term rather than their nations interests now. This is particularly true of the UK.
Its incredible how Europe has been sucked into this virtue signalling mantra of believing CO2 leads to climate change without researching themselves whether this is based on any firm scientific proof. The the UK Parliament, despite wanting to spend up to a Trillion pounds on climate change policies, Climate Change has never been debated. It's never been on the Parliamentary agenda. This is a disgrace considering they are all elected officials represent tax paying constituents.
Politicians have gone full tilt into wind and solar power generation so called green energy without any regard for the fact that cold winters are normally devoid of both wind and solar, particularly on cold cloudy days and night times meaning most of the winter hours. This has meant that contingency baseload need to be paid for always available and wind/solar are often shut-down to stabilize the grid during storms or at night. This has lead to skyrocketed electricity prices feeding directly through to high inflation levels for everything goods and services. It's just triggered the downfall of the government in Norway - they are livid with being self sufficient in oil/gas/hydro - yet having to pay six times the average electricity prices because they are linked to Germany and their wind farms that run idle during winter cold snaps and storms. Whilst the EU and UK currencies have weakened because of high deficits, real wages have dropped. Productivity growth has stagnated, efficiency has reduced and aging infra-structure is unable to cope with expanding poorer populations particularly in the UK.
It's frankly a disaster that is only just starting to unfold. The increasingly uncompetitive UK dragged down by a record tax burden, increasing regulation and red tape, an extremely slow and inefficient planning process and aging population is starting to collapse with bond yields rising, mortgage rates likely to rise as inflation takes hold. House prices are likely to start declining, unemployment will definitely rise and tens of thousands of millionaires will be heading overseas to escape draconian taxes and poor job opportunities. Add to this the brain drain out of our best Universities - and No Dom billionaires leaving in droves - with the economy struggling post Brexit and you can see a perfect storm of economic woes - mainly self inflicted - that is dragging the UK and EU into economic collapse.
What Labour fail to realise is that every time they increase taxes, their tax take will drop as unemployment rises and their social security bill will skyrocket. They starting their term in office by giving publics sector workers giant sized pay rises that set the tone. The bloated government and public sector are sucking the life blood out of the private sector. Much of the top talent is leaving the UK and many professionals are retiring. Wealthy people are holding onto their cash rather than risking investing in the UK - since any profitable enterprise is treated as if it's doing a dis-service to the general population. Business is castigated by Labour rather than supported. The word "profit" has become like s swear word - people are scared to mention it. Thousands of lawyers work with the public sector to fine and prosecute any enterprise that is found to have broken a regulation. Doing business int he UK has frankly become too risky - personally for small business owners and corporately for directors of companies.
Many young workers in the middle classes seem to have an entitled attitude to work they have no experience of high unemployment and they think their living standard will be like those of their wealthy baby boomer parents. The problem is most of the top entrepreneurs are leaving the UK for places like Dubai, USA, Portugal, Malta, Isle of Man, Jersey and Italy. The miserable winter weather and creaking overcrowded infra-structure have put many off. Add to this the ridiculous cost of train fares, utility bills, rents, staycations, restaurants and concerts, with newspapers costing £4.5 and cigarettes £15 a pack, smart people are simply voting with their feet to get away from the negative prosecuting Prime Minister with his Cabinet devoid of talent and business acumen an embarrassment on the international stage.
But the UK problems run deeper than this. How can UK manufacturing ever compete with the USA when they pay six times more for electricity especially in the world of AI when giant electricity intensive data centres are required to power the new economy.
Add to this the threat of AI on all jobs - the professional classes in the UK frankly does not know what's about to hit them. It will be giant. Estimates of 8 million jobs losses in the next ten years are real - many of these will be in the high end professional work place - lawyers, surveyors, estate agents, human resources, finance, investment banking, energy/utilities, manufacturing, police, health, miliary, call centres.
To risk mitigate - workers in the 18-55 year old bracket should all learn coding and how to operate AI devices - how to use AI to develop Apps, productions and services. They will then have a chance of surviving the jobs rout. It's a very serious prediction " we see the writing on the wall".
This the outlandish electricity prices, how can factories afford to make cars when the EU has mandated that all cars will be electric by 2035 and the UK hardly makes any EV cars - the ones that are made are uncompetitive. Its worth pointing out that Tesla are 7 years ahead in EV car technology and autonomous driving databases/technology and the Chinese produce cars at a fraction of the price that Europeans do - and are heavily subsidised by the Chinese government . On top of that, their electricity cost ten times less and they mine all the rare earth metals that they need for batteries. We are light years behind in large part because our country is run by politician with no background in economies or industry.
Lets now discuss the competition. The new US Administration announced on 24 January 2025 they plan to be the dominant player in AI, crypto and energy. They will drive energy costs in the USA to half of what they are today. Meanwhile the UK energy prices are likely to double in the next four years. If our mathematics is correct and objectively speaking in four years time the UK electricity prices should be around 24 times what they are in the USA. Meaning ours double because of increasing solar and wind, and the USA's halves due to "drill baby drill" policies. At a bear minimum 12 times more. Can you now see what will happen. mass unemployment, the collapse of UK manufacturing and all car production. It simply is unsustainable destroyed by our desire for a so called future sustainable world. Can you now see what these virtue signalling globalists are doing to our country. They are destroying our economy and our livelihoods. Poverty and energy insecurity will be the outcome for millions. This is not a gripe it is simply the truth energy poverty, homelessness and business collapse has started in earnest and it will only accelerate henceforth.
The USA is run by a very successful business man a hard negotiating property tycoon President Trump - many in the UK do not like or respect him - though most will agree he is successful in business and managing assets. His chief adviser Elon Musk is the most successful entrepreneur on the planet the richest man on earth. He is also a fantastic hardware engineer, software engineer, rocket scientist and business man - plus strategist. He plans for the future. They have declared an energy war and they want to send their oil and LNG/gas to Europe, put tariffs on European imports and dominate the world competitively through innovation, low cost energy and streamlining the planning processes with no climate taxes and few regulations. Can you now see how this will end. Its simple economics they will destroy the European economy and manufacturing. Its likely to lead to hyper-inflation in large parts of Europe with the UK being the most likely to spiral first into economic collapse because of its weak fundamentals, very high taxes, isolation outside the EU and massive import bills for both energy and food, goods and services. North Sea oil and gas are in steep decline after successive tax hikes to stratospheric levels never seen before just when assets are aging and becoming sub-economic. We are guessing this is their vindictive way of getting back at an industry they perversely don't seem to like despite it being run by working class rig men. Rather like what Margaret Thatcher did to Coal Mining. That's said, Labour refused planning permission for a new Coal Mine in Cumbria and closed down the last coal burning power station in Ratcliffe-on-Soar in the first few weeks of their term.
In simple terms the UK and EU have become uncompetitive. The increase in population is mainly driven by immigrants and nationals that were not born the the UK - that though normally hard working - are normally less well educated/experienced and have very little financial backing to drive new growth, business and innovation. The high energy costs in particular plus red tape and an aging population put Europe at a tremendous disadvantage to both the US and Chinese economies. The USA and China both know this. They try and attract the very highest qualified immigrants. China and the USA are playing an economic game that they know they will win against each other and both against Europe and they dont even need the European market to succeed for them to prosper. And the threat of gas/oil/energy wars with Russia plus the military threat posed by Russia is all the time creating doubt and uncertainty in the investment climate in Western Europe and the UK. The USA and China know this - as does Russia. It seems the UK and Europe have lost their friends - and recrimination are starting. Full on attacks on the UK Prime Minister by Elon Musk is just the beginning.
Stop - concentrate - take note. For yourself and your families:
To risk mitigate against this ensuing economic collapse, the very best-safest thing you can do is focus your investing in US companies and AI/innovation. The very best are:
Tesla
Bitcoin
Microstrategy
Solana
These are all supported by the dollar or are dollar based entities - and all will have short supply, with massive future demand and are in the Innovation and AI space. More in our next Special Report.
Just a few words on Tesla and Microstrategy:
Tesla businesses:
1 EV cars (5 years ago of competition) - will dominate upper end of market
2 Autonomous Taxis/Driving - go live mid 2025
3 Energy Storage - exponential growth - in its own right work $1 Trillion
4 Autonomous van - plans
5 Semi-truck - production ramping up
6 CyberTruck - production ramping up
7 DoJo chip - to launch late 2025 to compete with Nvidia
8 Humanoid Robots - production ramping up - for manufacturing, buddies and likely to replace soldiers
9 Solar - they install domestic and commercial solar panels - a growth sector
All these business lines have exponential growth. They are AI intensive. The stock is way undervalued - and we expect it to rise 5-7x in the next 5 years.
On Microstrategy:
1 First Bitcoin treasury bank
2 Able to borrow devaluing fiat at close to 0% interest - to invest in Bitcoin that rises 55% a year
3 Governments around the world will start putting Bitcoin into their reserves - 4 Microstrategy owns ~460,000 Bitcoin - over 5% of the freely available supply and dominate the Bitcoin treasury sector - their share price should 5-7x in the next 5 years.
We hope this admittedly rather gloomy outlook is insightful and helpful to de-risk your investment portfolio. Regretfully, we can't think of a single sector or company in Europe that is worth investing in if you want big upside and low downside, for real growth.
As far as UK property is concerned - again it's difficult to see how value can ben made when so much wealth is leaving the country. Low end will suffer. The middle market may suffer even more with AI on the horizon. The upper market will suffer from Non Doms and millionaires leaving. The only opportunities may be after a property price collapse in a few years - being derelict properties that can be cheaply converted, but it's simply too difficult and risky at this time - with massive inflationary pressures and financial exposure on the horizon. We would play the waiting game, and consider divesting if you are heavily exposed to UK property at this time - with 4 years of Labour too look forward to!